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Moody's downgrades Molina Healthcare, units

Moody's has downgraded the senior unsecured debt ratings of Molina Healthcare Inc. to B3 from B2.

The agency has also downgraded the insurance financial strength ratings to Ba2 from Ba1 of Molina subsidiaries Molina Healthcare of California, Molina Healthcare of Michigan Inc., Molina Healthcare of New Mexico Inc., Molina Healthcare of Ohio Inc., Molina Healthcare of Texas Inc. and Molina Healthcare of Washington Inc.

The outlook on Molina and its subsidiaries has been changed to stable from negative.

The ratings actions reflect Moody's assessment that Molina's credit profile has further weakened following the loss of significant Medicaid contracts in Florida and New Mexico, effective Jan. 1, 2019. Additionally, the company posted an operating loss of $555 million for 2017, reflecting numerous operating weaknesses, including being cited for a material weakness by its auditors, Moody's said.

On the positive side, the rating agency said Molina is in the middle of a companywide restructuring and expense-cutting program and has already achieved significant cost savings, with a number of operational improvements underway.

All the ratings are based primarily on the company's concentration in the Medicaid market and numerous operational weaknesses that resulted from its rapid growth in recent years, Moody's said.